SIX SIGMA COMPANIES

DEFINITION OF SIX SIGMA

Six Sigma is a data driven philosophy and process resulting in dramatic improvement in products/service quality and customer satisfaction. Six Sigma is the team approach to defining, measuring, analyzing, improving and controlling processes. Six Sigma is a set of tools aimed at reducing variability in the inputs and in the process to increase predictability of outputs.

DEFINITION OF SIX SIGMA

Six Sigma as a metric
Sigma as a way to measure quality - a standard that reflects the degree of control over any process to meet the standard of performance established for that process Sigma as a yardstick allows to compare very different business processes in terms of the capability of the process to stay within the quality limits established for that process Sigma measures defects per million opportunities (DPMO)

DEFINITION OF SIX SIGMA

DEFINITION OF SIX SIGMA

4.6 s 99.90000% Good
4,000

Product or Service
Wrong medical prescriptions each year

6.0 s 99.99966% Good

13

3, 000

Newborns being dropped by doctors/nurses per year

Lost letters per hour

10

400

2 per day

Short or long landings at major airports

2 per year

DEFINITION OF SIX SIGMA

Reduce Variation and Center Process

Outputs are off specs which require inspection and added cost

Within Specs and Centered, Which doesnt need Inspection resulting to savings

IMPORTANCECost OF SIX SIGMA of Poorly Performing Processes

The Villain
s level 2 3 4 5 6 DPMO 308,537 66,807 6,210 233 3.4 CP3 Not Applicable 25%-40% of sales 15%-25% of sales 5%-15% of sales < 1% of sales

Each sigma shift provides a 10% net income improvement

Cost of Poorly Performing Processes (CP3)

Sigma (s) is a measure of perfection relating to process performance capability the bigger the better. A process operating at a Six Sigma level produces only 3.4 defects per million opportunities (DPMO) for a defect. Without dedication of significant and appropriate attention to a process, most processes in leading U.S. companies operate at a level between 3 and 4 sigma.

 and the Hero

What Does Six Sigma Tell Us?

We dont know what we dont know. We cant do what we dont know. We wont know until we measure. We dont measure what we dont value. We dont value what we dont measure.

Typical Results: companies that properly

implement Six Sigma have seen profit margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s. Since most companies start at about 3s, virtually each employee trained in Six Sigma will return on average $230,000 per project to the bottom line until the company reaches 4.7s. After that, the cost savings are not as dramatic.

However, improved profit margins allow

companies to create products & services with added features and functions that result in greater market share.

PROCESS MODEL

INPUTS X1 X2 X3 PROCESS for the creation of a product or service

PERFORMANCE MEASURES

Y1
Y2 etc..

etc..

PROCESS METHODOLOGY
D Define Identify and state the practical problem Based on customer input, select the appropriate response (the Ys) to be improved and ensure that they are quantifiable and can be accurately measured

M Measure A Analyze I Improve C Control

Analyze the preliminary data to document performance of baseline process capability. Begin identifying root causes of defects (the Xs or independent variables) Determine how to intervene in the process to significantly reduce the defect levels. Several rounds of improvement may be required. Set up control systems to prevent recurrence of a problem

SCOPING TOOLS
1. Critical to Satisfaction Tree (CTS) 2. Kano Model 3. Quality Function Deployment (QFD) 4. SIPOC Diagram 5. Pareto Chart 6. Process Map 7. Fish Bone Diagram 8. Fruits of Six Sigma 9. Cause-and-Effect Matrix 10.Value Stream Map 11.Check Sheets 12.Activity Network Diagram

MEASURE / ANALYZE TOOLS

Correlation and Simple Regression Attribute Agreement Analysis Gage Repeatability and Reproducibility (GR&R) Design on Experiments Analysis of Variance (Anova) Multiple Regression Analysis Others

HYPOTHESIS TEST

Null Hypothesis = Ho: No Significant Change:

For Tests Of Process Mean: H0: m = m0 For Tests Of Process Variance: H0: s2 = s20

Alternate Hypothesis = Ha: Has Significant Change:

IMPROVE PHASE

CONTROL CHART SELECTION PROCESS

Characteristic Selected

Variable Data
Yes Variable Data? No

Discrete or Attribute Data

No Proportions Counts Constant sample size No u Chart

Yes

Homogeneous or NOT able to subgroup data?

No Yes Yes

Individuals Chart (I-MR)

Subgroup size > 9

No

Average Chart (Xbar-R)

Constant sample size

No p Chart c or u Chart

Yes

Yes

Ability to calculate s for each subgroup

No np or p Chart

Yes Average Chart (Xbar-s)

DMAIC Process
Define Measure YES

Process Capability OK?

NO Analyze Redesign

Modify design?

YES

NO Improve NO

Process Capability OK?

YES Control
TEAMING LEARNING AGILITY MARKET FORESIGHT

Outline
Purpose of the Define Phase Deliverables of the Define Phase Key Steps in the Define Phase The Project Charter Tools for the Define Phase Deliverables from the Class Groupwork (Project Charter and CTC Tree of a Fictitious Company) Groupwork (Project Charter and CTC Tree of chosen company)

The Purpose of the DEFINE Phase

To have the team and its sponsor

agreement on the scope, goals, performance targets, financial targets, and management of the
reach project.1
1 modified from the main text.

The Purpose of the DEFINE Phase

AGREEMENT A contract / charter. SCOPE Product or Process to be improved. Client segments / Stakeholders to be affected. GOALS Gap between requirements and process outputs, and the desired future state. PERFORMANCE TARGETS Key metrics and their corresponding baseline and targets (may be completed in the Measure Phase depending on the availability of initial data).

The Purpose of the DEFINE Phase

FINANCIAL TARGETS Preliminary estimates of monetary benefits of the project.; preferably computed directly from the improvement in the performance targets. PROJECT MANAGEMENT Project Member Roles Schedule and Milestones Communication Plan Budget and Other Resources

Deliverables of DEFINE Phase

PURPOSE
Agreement Scope

DELIVERABLES
Project Charter SIPOC Client Types / Segments Problem Statement; Project Goals CTC Tree, Project Objectives

Goals
Performance Targets Financial Targets

Business Impact approved by a Representative of Accounting

Gantt Charts (Milestones) Team Members Communication Plan Budget

Project Management

Key Steps of the DEFINE Phase

REVIEW DRAFT PROJECT CHARTER Champion drafts an initial charter. Preliminary team negotiates the scope, timing and schedule, resources needed, and members. Deliverables: Initial Statement of the Problem, Initial Team Composition, and Preliminary Schedule. VALIDATE PROBLEM STATEMENT AND GOALS Validate existence of the problem. Define who the clients are. Deliverables: Statement of the Problem. Project Goals. Client Types / Segments.

Key Steps of the DEFINE Phase

CAPTURE VOICE OF THE CUSTOMER (optional) Conduct necessary tools to identify customer needs and priorities. Deliverables: Kano Analysis, CTC Tree, CTC specifications. CAPTURE VOICE OF THE PROCESS (optional) Determine Baseline data for the CTCs Establish targets. (may be done in the measure phase). Deliverables: Baseline data and Target Data.

Key Steps of the DEFINE Phase

VALIDATE FINANCIAL BENEFITS Estimate cost savings and/or increase in revenue assuming targets are met. Deliverables: Business Impact. CREATE PROCESS MAP Develop high-level process maps that provides the scope the processes being improved. Deliverables: SIPOC.

Key Steps of the DEFINE Phase

FINALIZE PROJECT PLANS Identify stakeholders (sponsors, customers, managers, process owners, project facilitators) and team members. Develop schedule, budget, milestones, communication plans Deliverables: Gantt Charts (Milestones), Communication Plans, Budget, Final Team Members. Complete Project Charter signed by appropriate executives. Note that the charter may be updated throughout the project duration (subject to approval).

DEFINE M A I C
The Project Charter or Team Charter
The Customer
The Voice of the Customer (VOC) Critical to Quality Supplier-Input-Process-Output-Customer (SIPOC)

DEFINE M A I C
The Project Charter or Team Charter
A project charter or team charter is a team contract that summarizes the goal of the team and the resources (people, time) that will be deployed for the project. It is a living document. It is updated as more pieces of information are known as the project progresses.

Project Title What is the specific defect? What is the improvement goal? Example: Square Nano Quality Project Team of Littelfuse Project Title: Reduction of Loose Caps in Square Nano Fuses

DEFINE M A I C
The Project Charter or Team Charter
Problem Statement What is the problem (name of the process/product/line, period covered, metrics)? What is the effect of the problem (quality, cost, delivery)?
Example of a Bad Opportunity/Problem Statement The Package Delivery process needs to be improved. ABC Company has received numerous customer complaints. ABC employees also confirm there is a problem, Improving the process will increase the Customer Satisfaction scores. Example of a Good Opportunity/Problem Statement The ABC Company shipped P8.2 million of products in April, many of which were late (what). Data collected from customers for the last 5 months (when) indicates that an average of 44% of southern customers (where) experienced problems but only 8% of others customers experienced problems. During the month of April, ABC had 40 late shipments (extent) to the southern customers worth P1, 520, 000.

DEFINE M A I C
The Project Charter or Team Charter
Business Case A clear and common understanding of why we should do the project, and what it will cost us Why is this project prioritized over other possible projects? Quality/Delivery/Financial Benefits What is the expected savings for this project? For what period will the savings be realized (annual, monthly)?

Goal Statement What is the defect that needs to be reduced? What is the baseline and the objective? What is the expected date the target will be achieved? 30% - 70% break through improvement

DEFINE M A I C
The Project Charter or Team Charter
Scope and Limitations What process will the project focus on? What processes will be excluded from the project? Stakeholders Who or which specific function will be directly affected by the project (management, suppliers, customers)?

Team Members and Project Champion Who will be able to contribute to the project? Who will remove roadblocks and allocate resources?

DEFINE M A I C
The Project Charter or Team Charter
Team Members and Project Champion Senior Executive -- provides the impetus, direction and alignment necessary for 6sigmas ultimate success Champion - takes a very active sponsorship and leadership role in conducting and implementing 6sigma projects. He/She should have enough influence to remove obstacles or provide resources without having to go higher in the organization Process Owner manager of the process. Has the responsibility for the process ad has the authority to change the process on his or her signature Master Black Belt - keeper of the 6sigma process and advisor to senior executives or business unit managers Black belt a full-time change agent and improvement leader who may not be an expert in the process under study Green belt works on the project part time

DEFINE M A I C
Project Charter: Customer Delivery Cycle Time Improvement

Business Case
Our current delivery time average is 72 hours for Product X. Customers are requiring delivery in 48 hours. Our competitors are meeting the 48-hour requirement. As a result, we are losing 1.5% of our customer base per month for the last 10 months ($75,000/month), new sales are down 10% for the same 10 months ($60,000/month). By decreasing our delivery time we anticipate the loss of the current customer base to drop below 0.3% (savings=$60,000/month) and new sales will increase 18% above their original base ($108,000).

Opportunity Statement
We currently have an average deliver orders cycle of 72 hours. Our customers require it within 48 hours. Our process is currently operating at a 2.1 sigma level.

Goal Statement

Project Scope
Order Processing Core Process Start: Call entered into system Stop: Product in customers hands Involve all Department Core process related Enabling process related

Reduce cycle time from call by customer to receipt by customer to 48 hours by fourth quarter. Reduce number of defects 10 fold; from 20,000 to 2,000 by the end of the year. Increase process sigma to 3.5.

Project Plan
Activity Form Team Finalize Charter Gather Data Analyze Data Select Solution Meet Management Develop Plan to Implement Closure & Recognition wk 1 wk 2 Time wk 3 wk 4 wk 5

Team Selection
Albert Barry Carrie Denise Eric Frank Gwen Hillary Sponsor Master Black Belt Black Belt Dispatch Supervisor Senior Dispatcher Administrative Manager Truck Loader Truck Loader

DEFINE M A I C
The Project Charter or Team Charter
Another way to evaluate a Charters completeness is through an evaluation methodology called SMART This acronym is a checklist to ensure that the charter is effective and thorough

Specific Measurable

Does it address a real business problem? Are we able to measure the problem, establish a baseline and set targets for improvement? Does it relate to a business objective? Is the goal achievable? Is the project completely realistic? Have we set a date for completion?

Attainable Relevant Time bounded

DEFINE M A I C
Project Charter

Source: www.wcqc.asq.org/2009/team-competition/index.html

The Project Charter

The Project Charter

(Image Source: Keller, 2011)

Tools for the DEFINE Phase

GANTT CHART Shows the schedule of each of the project phase/activity.

(Image Source: www.advsofteng.com)

Tools for the DEFINE Phase

PERT-CPM Emphasizes critical activities that may increase project duration if not properly followed. Visually presents prerequisite activities of a task. Provides slack times for other non-critical activities.

(Image Source:

Tools for the DEFINE Phase

SIPOC A high-level process map that captures information critical to the project Helps a team and its sponsors agree on project boundaries and scope Helps verify that process inputs match outputs of upstream process and the inputs/expectations of downstream processes.

DEFINE M A I C
SIPOC Diagram -- a tool used by a process improvement team to identify all
relevant elements of a process improvement project before work begins

S
Suppliers The provider of inputs to your process

I
Inputs Materials, resources or data required to execute your process

P
Process A structured set of activities that transform a set of inputs into specified outputs, providing value to customers and stakeholders

O
Outputs The products of services that result from the process

C
Customers The recipients of the process output

DEFINE M A I C

 SIPOC (Image Source: www.asq.org)

DEFINE M A I C

Source: www.wcqc.asq.org/2009/team-competition/index.html

DEFINE M A I C
The Customer
The Customer is a recipient of a product or service A customer may be internal or external An internal customer is in the next process of department within the same company An external customer of end customer is the final recipient of the finished product or service

DEFINE M A I C
Voice of the Customer (VOC) Critical to Quality (CTQ)
Voice of the Customer (VOC) actual needs as expressed by the customer Critical to Quality Characteristics product or service specification quantified and translated from the VOC Operational Definition (OD) allows only one interpretation of the VOC Illustration:

VOC
Safety Delivery Quality Cost

CTQ
Cycle time yield

OD
Time study ppm, Cpk

QFD Approach

Customer Requirements

Functional Measures

Parts Characteristic

Manufacturing Process

Production Requirements

Tools for the DEFINE Phase

CRITICAL-TO-CUSTOMER (CTC) or CRITICAL-TOSATISFACTION (CTS) TREE Can help convert vague needs and wants of the customers into precise functional requirements.
Voice of the Customer I hate dealing with your company. The Why (After Clarification) Products are not delivered on time. CTC Requirement 10 day lead time (+/- 1 day)

Specific Types of CTC/CTS. CTQ critical-to-quality CTD critical-to-delivery CTC critical-to-cost

Special Types of CTC Trees CTX Product Tree CTY Process Tree

 CTC TREE (Image Source: www.sixsigma-traning.org.uk)

 CTC TREE (Image Source: www.operations-excellence.blogspot.com)

 CTC TREE (Image Source: www.tebyan.net)

DEFINE M A I C
Critical-to-Quality (CTQ)Tree-- convert
customer needs/wants to measurable requirements for the business to implement.

DEFINE M A I C
Critical-to-Quality (CTQ)Tree
Example: Ben-Hurs Pizza wishes to add home delivery to their services in order to expand their business. They have surveyed current and potential customers to determine what would make them order Ben-Hur pizza instead of a competitors or instead of a different kind of food. Summarized VOC data told them that when customers order-in pizza, they want hot pizza, now, with my choice of toppings and crusts, at a reasonable cost.

DEFINE M A I C
Critical-to-Quality (CTQ)Tree
CTQ Tree for VOC NOW

LOGO LOGO

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